The Department for Work and Pensions (DWP) is offering interest-free one-off loans—called Budgeting Loans or Budgeting Advances—of up to £812 to households on certain benefits.
These loans are designed to help with unexpected costs such as household essentials, travel, or work-related expenses. It’s essential to understand who qualifies, how to apply, and what repayment terms are involved.
What Are Budgeting Loans and Advances?
These are one-time, interest-free loans available to people claiming certain long-term welfare benefits, aimed at easing financial hardship without the burden of interest. The funds are repaid automatically via deductions from ongoing benefit payments.
Eligibility Criteria
| Type of Benefit | Qualifies for… |
|---|---|
| Legacy Benefits (e.g., Income-related ESA, Pension Credit, Income Support, Income-based JSA) | Budgeting Loan |
| Universal Credit for 6+ months | Budgeting Advance |
Applicants must also meet savings and earnings thresholds, and cannot already be repaying a previous loan.
How Much Can You Borrow?
- Minimum loan amount: £100.
- Maximum amounts vary by household situation:
- £348 if single
- £464 if in a couple without children
- £812 if you or your partner claim Child Benefit
Loan amounts are reduced if you have savings over £1,000 (or £2,000 if you’re 63+), or if you’re already repaying a previous loan.
What Can This Loan Be Used For?
Funds can be applied toward essential, unexpected, or one-off expenses, including:
- Household appliances (e.g. washing machines or other white goods)
- Clothing or footwear
- Travel or job interview costs
- Furniture, tools, or equipment for work
- Home improvements or security
- Rent in advance, moving, or maintenance
- Funeral or maternity costs
- Repayment of hire purchase agreements
Repayment Terms
Repayment takes place via automatic deductions from your benefit payments:
| Loan Type | Typical Repayment Period |
|---|---|
| Budgeting Advance | Up to 24 months |
| Budgeting Loan | Up to 24 months |
No interest is charged—meaning you only repay the amount borrowed. New legislation also caps monthly deductions to 15% of your Universal Credit standard allowance, down from 25%.
Application Process
Applicants can apply by:
- Universal Credit journal or helpline (for Budgeting Advances).
- Online on GOV.UK, paper form, or via Jobcentre Plus (for Budgeting Loans).
Most applicants receive a same-day or very fast decision, making this support accessible when emergencies strike.
The DWP’s one-off Budgeting Loans and Advances, offering up to £812, provide valuable short-term relief for households facing unexpected expenses.
With interest-free terms and manageable repayment options, they can be a lifeline—but understanding eligibility, borrowing limits, and repayment terms is crucial. If you’re on benefits and facing urgent costs, it’s worth checking whether you qualify today.
FAQs
Is this money free or a loan?
It’s a loan, not a grant. It must be repaid via automatic deductions from your future benefit payments.
What happens if my loan causes hardship during repayment?
You may request a repayment pause or extension, based on your financial circumstances and affordability.
Can claimants on PIP or Disability benefits apply?
Yes—if they also receive a qualifying legacy benefit or Universal Credit and meet the six-month requirement.